JOHNY CHANDY Vs. CATHOLIC SYRIAN BANK LTD

JUDGEMENT

(1.) The plaintiffs are the appellants. They are the share-holders of the Catholic Syrian Bank Ltd., hereinafter called the bank. The Board of Directors of the bank resolved on 1-8-1994 by Ext. B18 to call the 73rd Annual General Meeting of the Bank on 28-9-1994. Ext. A21 notice dated 18-8-1994 was issued to the share-holders in that behalf. On 12-9-1994 a special notice invoking Sections 284 and 190 of the Companies Act,. 1956 was given by three of the share-holders, of an ordinary resolution to remove three of the members of the Board of Directors and proposing to elect in their stead, three other members as Directors. The notice is marked as Ext. B 16 and the resolutions for removal of defendants 9, 10 and 11 are marked as Exts. A23 to A2S. Exts. A23 to A25 wre sent along with Ext. B 16. The resolutions also proposed that plaintiffs 3 to 5 be elected in place of the Directors proposed to be removed. The said members also forwarded the said resolution to the members of the bank including the Directors sought to be removed. The Secretary of the Bank put up the notice Ext. B16 along with the resolutions and his note to the effect that the resolutions were in order. On 14-9-1994, the Board of Directors considered the said resolutions and decided to take legal opinion on the validity or otherwise of the said resolution. It was also resolved that subject to permission to be obtained from the Registrar of Companies, the Annual General Meeting may be postponed to 19-10-1994. Ext. B20 is the minutes of the meeting and Item No. 78 of the agenda relates to this decision.

(2.) After the legal opinion was received, the Board considered the questions of the validity of the notice to remove the members of the Board at its meeting on 29-9-1994. It is seen that the legal opinion was to the effect that since a notice under Section 284 of the Companies Act ought to conform to Section 188 of the Act, the resolutions moved by the three members were not valid. It was therefore decided to rule out the resolutions Exts. 423 two Ext. A25. One of the Directors opposed the rejection of the said resolutions and the two Reserve Bank of India nominee Directors indicated that they were not parties to the resolution. It may be noticed here that no notice had been published pursuant to the decision of the Board on 14-9-1994 to postpone the Annual General Meeting. But on 21-9-1994 the bank wrote Ext. B22 letter to the Registrar of Companies seeking permission to postpone the Annual General Meeting. By his communication of the same date marked Ext. B23, the Registrar gave the permission. On 23-9-1994, notices were published in the newspapers giving notice to the share-holders of the adjournment of the Annual General Meeting fixed to be held on 28-9-1994. The date of adjourned meeting was not given. The communication indicated that the date of the adjourned Annual General Meeting would be advised individually. Ext. B29 a copy of that paper publication. Subsequently, another notice was published in the newspapers of 6th Oct. 1994 giving notice to the share-holders that the postponed Annual General Meeting will be held on 29-10-1994 at the earlier venue notified. Copy of this publication is marked as Ext. B26. Individual notices dated 4-10-1994 were also issued intimating the share-sholders of the postponed Annual General Meeting being held on 29-10-1994.

(3.) On 17-10-1994, the appellants filed the suit O.S. No. 1261 of 1994 on the file of the Subordinate Judge's Court of Trichur and also filed LA. No. 7929 of 1994 for an interim injunction restraining the defendants, the Bank and the Board of Directors from convening the Annual General Meeting on 29-10-1994 and restraining respondents 7 to 11 from Participating in any Board meeting on the ground that they had already been removed. It appears that on 28-9-1994 the date originally fixed for the holding of the Annual General Meeting, 433 members of the Company gathered together in the place indicated in the original notice, Ext. A21. According to the appellants in addition to considering the resolutions included in the agenda Ext. A21, the members present also took up and passed the resolutions Exts. A23 to A25 and as a consequence, respondents 7 to 11 were incompetent to continue as member of the Board of Directors. In other words, it was contended that three of the members of the Board had been validly removed and three others elected in their places and three other share-holders were also elected to the places vacated by the members of the Board whose term had expired. According to the appellants, the meeting held on 28-9-1994 was validly held and therefore there was no further occasion for the holding of an Annual General Meeting on 29-10-1994 and hence the holding of any such meeting also should be restrained in addition to preventing those members who had ceased, to be members, from functioning as member of the Board of Directors. The application for injunction was opposed by the respondents therein and the court posted the interim application for counter to 20-10-1994. On the request of the respondents, the petition was again adjourned to 24-10-1994. Due to some confusion, the petition was not called on 24-10-1994 and hence the appellants filed an application for advancing the hearing of LA. 7929 of 1994. The application was taken up and posted to 27-10-1994. It is to be noted that the postponed Annual General Meeting was to take place on 29-10-1994. Arguments were heard on 27-10-1994 and 28-10-1994 and on 29-10-1994 the Court passed an order refusing to grant the interim injunction prayed for by the appellants. Subsequently a meeting was held on 29-10-1994 and it was adjourned for direct polling to 31-10-1994 and for proxies to 1-11-1994. Meanwhile on 31-10-1994, the appellants moved this court by O.P. 15167 of 1994 at 1.45 P.M. seeking an order restraining the polling fixed for 31-10-1994 and 1-11-1994. The main prayer in the Original Petition was for the issue of a direction to the Subordinate Judge's Court of Trichur to issue a certified copy of the order in I.A. 7929 of 1994 urgently. This court granted the main relief and directed the Subordinate Judge's Court of Trichur to issue a copy immediately but refused to stay the polling fixed for 31-10-1994 and 1-11-1994. The copy of the order was issued to the appellants on 5-11-1994. Meanwhile on 2-11-1994, the results were announced after the the poll. This Civil Miscellaneous Appeal was filed by the appellants on 11-11-1994 challenging the refusal of the court below to grant reliefs to them in I.A. No. 7929 of 1994. The learned Advocate General took notice on behalf of the contesting respondents and at the request of counsel appearing in the case, the Civil Miscellaneous Appeal itself was heard finally.